Growth stocks with aggressive volatility can be an exciting ride. But one may have to live with having their portfolios aggressively full one day and empty the next if they don’t learn to embrace the not-so-interesting value stocks.
This brings us to Qorvo, Inc. (Nasdaq: QRVO), which has been through rough times for a while. The dip has had more to do with the general tech industry sell-off amidst other external factors than the fundamentals of the company itself. While Qorvo is your most exciting stock, there’s evidence to believe it is worth keeping an eye on for its value.
Source: Polina Kovaleva
Qorvo Inc is a semiconductor chip maker that boasts Apple among its customers. The company primarily deals with the design and development of chips that make wireless and wired connectivity and communications possible. Think WiFi, telecoms, and the like.
The most recent quarterly report, Q3 FY 2022, recorded many metrics that looked stable for the company. Revenues increased year on year to $1.11 billion, albeit by a meager 0.67%. However, earnings per share of $3.42 surprised analysts who had estimated $3.25 for the company. Net income also looked good, growing by 7.57% to $216.2 million over the same time compared to the previous year.
Another metric that we rely on to predict good value stocks are the price to earnings ratio. The price-to-earnings ratio help us compare stocks on a level playing field, regardless of the company size.
When a company has a P/E ratio that is lower than that of its industry average, it may be a signifier that the stock is trading cheaper than other stock in that industry. This is the narrative of the Qorvo stock, which trails the US semiconductor market’s 24.1 average with its 12.3x.
How can we know that the relatively low cost doesn’t mean it’s the signs of a dying company then?
Looking at revenue, Qorvo has consistently increased it year-on-year in over 5 last quarters. With the continuous growth of 5G and Internet of Things, Qorvo looks to be in a sweet spot to reap from it.
Technical Analysis
The QRVO stock is approaching the $115.5 – $121 support level, having torn through other support levels before this one. However, this current support level has something other levels didn’t have. It has the backing of a price action chart pattern, the Head and Shoulders.
Many analysts rely on the Head and Shoulders pattern to predict reversals, which has also played out on the Qorvo Stock. This $115.5 – $121 support level almost coincides where the bears who rode the pattern take their profits and, many times, relinquish their hold on the instrument.
While it is not a given that this reversal will end here, the dip may very well rest here. If the stock does break through this support level, there’s another support level at $84.5 – $90. Any of these levels could be where the stock makes its long anticipated U-turn. We can only be sure, however, when we keep an eye on the stock to gauge what the price does at any of these levels.
Our recommendation is to hold the QRVO stock for now and to buy when the price shows signs of ranging or reversing at any of those support levels.
